Greece warns rescue deadline close

DOWN TO THE WIRE:Greece’s finance minister said the troika and eurozone members were becoming impatient as sticking points on wages and spending cuts remained

Reuters, ATHENS

Greece has just one day left to strike a deal with impatient lenders and reluctant political party leaders on a 130 billion euro (US$171 billion) rescue plan before the country is pushed toward a chaotic default, its finance minister warned on Saturday.

Athens has wrangled without success for weeks with lenders and private bondholders on the bailout package and a bond swap plan, putting itself dangerously close to bankruptcy as 14.5 billion euros of debt falls due in the middle of next month.

The talks have been held up largely on concern that the rescue plan may not be enough to bring Greece’s debt back to a sustainable level and fears that Athens lacks the will or ability to ram through reforms demanded in exchange for aid.

In an apparent warning to Greek political leaders opposing key reforms, Greek Finance Minister Evangelos Venizelos said the patience of European partners and the IMF footing the bill for Greece’s bailout was wearing thin.

“There is great impatience and great pressure not only from the three institutions that make up the troika, but also from eurozone member states,” Venizelos said after what he called a “very difficult” conference call with eurozone counterparts.

“The moment is very crucial. Everything should be concluded by tomorrow [Sunday] night. We are on a knife-edge,” he told reporters.

Athens had made progress by agreeing a plan to recapitalize Greek banks and details on privatization, he said. A senior banker told reporters that the recapitalization would occur mainly via common shares with restricted voting rights.

However, far bigger sticking points on wages and spending cuts remain unresolved and Venizelos warned that the stakes were rising as time ran out.

“The distance between the successful completion of the procedures and an impasse which could happen by accident or because of a misunderstanding is very small,” Venizelos said.

Greek Prime Minister Lucas Papademos was due to continue talks with lenders on Saturday in a bid to clinch an agreement before calling in the socialist, conservative and far-right party leaders in his coalition to seek their blessing.

That meeting of party chiefs, initially scheduled for Saturday, had been put off until early yesterday afternoon, a government source said.

Athens’ talks with its international lenders have stumbled over their demands, which include cutting labor costs by axing holiday bonuses and lowering the minimum wage — proposals vehemently opposed by Greek political party chiefs.

Greek officials have described the negotiations as tough, with the troika of European Central Bank (ECB), EU and IMF lenders unwilling to yield an inch from their demands. Marathon negotiations ended without a deal on Friday.

“The troika is not backing down on wages, holiday bonuses and supplementary pensions,” a Greek government official said. “None of these issues have been resolved. They are all open and the onus is on political leaders.”

The talks have moved slowly also because the troika wants agreement on all parts of the complex Greek rescue deal before signing off on the bailout, a source close to the talks said.

That includes reforms and spending cuts, pledges by political leaders to back the reforms, as well as the debt swap and any other initiative — including any taken by public creditors, like the ECB — that would bring Greece’s debt down to the targeted 120 pct of GDP level by 2020, the source said.